Income Advantages of Poorly-Qualified Immigrant Minorities

Theoretical background and objectives

We investigate an often overlooked implication of the signaling model of statistical discrimination: if immigrant minorities’ educational qualifications carry less signaling power, poorly qualified minority
members should experience positive statistical discrimination.We argue that the lower signaling power stems from disadvantages associated with insufficient language skills and lack of supportive parental resources, which prevent minority students from achieving those educational qualifications that would reflect their high motivation and ambition. Yet, if education counts less, we should find immigrant minorities in jobs for which they are under-qualified.

Research design, data and methodology

Using data from the German Microcensus, we compare log hourly personal income of 1.5th and 2nd generation "Spätaussiedler" (late emigrants) and persons of Turkish origin with that of native Germans, using a (semi-parametric) generalized additive models.

Findings

We find that poorly qualified persons of Turkish origin experience income advantages; they frequently work in jobs for which they are under-qualified. Once different frequencies of over- and under-education are taken into account, no ethnic differences in
educational returns remain. Our results extend to other comparable immigrant groups in Germany.